Technology and AI
The Bank of England is to get a second statutory objective on payments, ranked below financial stability
By Staff Writer | 30 August 2026
Ministers will extend to systemic payment systems the innovation duty the Bank already carries for clearing houses, and the amendments go to the House of Lords on 7 and 9 September.
The Treasury said on 27 August that it intends to give the Bank of England a new responsibility to support innovation in payment systems and in emerging forms of digital money. The duty will be a secondary objective, ranking below the Bank's primary objective of protecting and enhancing financial stability, and the announcement is explicit that it will not require the Bank to support innovation where doing so would undermine stability.
This is an extension rather than a new idea. The Bank has carried a secondary innovation objective since the Financial Services and Markets Act 2023 for its regulation of central counterparties and central securities depositories. The same approach is now to be applied to its supervision of systemic payment systems, including those settling in digital assets such as stablecoins.
Developments in digital payments technology, including tokenisation and DLT, have the potential to transform financial markets across the globe.
Lucy Rigby KC MP, City Minister
What a secondary objective actually does
A secondary objective is not a target and it is not a power. It is an instruction about how a regulator must reason when it exercises the powers it already has. Where two courses are open and both are consistent with the primary objective, the secondary objective tells the regulator which way to lean, and it gives anyone challenging a decision a statutory hook to argue the reasoning was never done. That is why the ranking matters more than the wording. Stability first, innovation second, and the second yields whenever the two collide.
The accountability sits in the reporting. The Bank will report to Parliament each year on how it has advanced the objective, which turns a general duty into an annual document that can be read, quoted and argued with.
The value of a secondary objective is in the annual report against it. Without that, it is a sentence in a statute that nobody can test.
The timetable and the reason for it
The change is to be made by amendments to the Financial Services and Markets Bill, which is next debated in the House of Lords on 7 and 9 September. Nothing is in force until the Bill passes, so a firm reading this now is reading an intention rather than a rule.
The reason given is competitive. The stated aim is to keep the regulatory framework moving at the pace of the technology and to hold the country's position in financial services, and the Bank's response was to welcome an announcement it says will support work it is already doing with the government and other authorities.
We welcome today's announcement, which will further boost our work to support innovation in financial services without compromising on financial stability.
Sarah Breeden, Deputy Governor for Financial Stability, Bank of England
For anyone drafting payment terms into a commercial contract, the practical question is whether settlement in a digital asset is about to become an ordinary option rather than an unusual one. That answer will not come from this announcement. It will come from the first supervisory decision the Bank takes with the new objective in hand, and from the first annual report explaining why it took it.